IMD: Cyprus slips in competitiveness survey
Cyprus has dropped four places in the competitiveness survey of the economies of 63 countries conducted by the IMD, the Swiss-based business school. Despite the economy’s 3.9% growth in 2017, Cyprus found itself ranked 41st.
The IMD World Competitiveness Rankings marked its 30th edition this year, showing that while Cyprus ranked 22nd among 63 countries in terms of economic performance, it is performing poorly on other criteria costing it to slip down on the competitiveness ladder.
In a statement issued commenting on the report, the Economic Research Centre (ERC) of the University of Cyprus said that the fall came as a result of a lower ranking in the area of government and corporate efficiency and infrastructure.
Cyprus was ranked 28th in terms of government efficiency, down from 22 last year, mainly on the deterioration in the areas of central bank policy, while the country’s credit rating remains in the non-investment grade area for almost six years, bureaucracy, justice, disposable income, and legislation on competition and immigration, the ERC said, adding that the slippage was contained by last year’s fiscal surplus, aided by the island’s tax regime.
The decline in business efficiency to 53 this year from 50, was mainly the result of deterioration in financial criteria such as financial risk factors, the stock market, corporate debt, and the digital transformation of companies, partly offset by a minor improvement in administrative practices, the centre added.
Cyprus is also lagging in terms of infrastructure, coming in at 41st, slipping down a spot. According to the ERC the slippage is relevant to the countries lagging in technological and scientific infrastructure, while criteria related to education had a positive impact on infrastructure ranking.
Other criteria which had their toll on Cyprus’ overall performance were the financial risk factor, social security contributions, and the increase in homicides, in which Cyprus did not make the grade. On the other hand, economic output, gross domestic product per capita, and the fiscal balance improved substantially compared to last year.
The top five most competitive economies in the world remain the same as in the previous year, but their order changed.
The United States returned to the first spot, followed by Hong Kong, Singapore, the Netherlands and Switzerland. According to IMD, the return of the United States to the top is driven by its strength in economic performance (first) and infrastructure (first). Hong Kong takes a somewhat different approach exploiting its government efficiency (first) and business efficiency (first).